NEW YORK (CNNMoney.com) - U.S. stocks looked set for a major selloff Monday as money fled overseas stocks and commodities and sought shelter in bonds as continued fears of inflation and an economic slowdown haunted global markets.

U.S. stock futures were off sharply in early trading, indicating a lower open for U.S. stocks.

Monday was a bruising day for overseas markets.

Trading was halted in India after the country's benchmark BSE index lost over 10 percent. It later recovered some ground, but authorities were still on high alert for suicides, Reuters reported.

Major markets in Asia chalked up big losses for the day on fears of rising inflation and tracking the selloff in commodities, with Japan's Nikkei falling nearly 2 percent.

Major European markets followed Asia's lead and were sinking by midday. London's FTSE and Germany's DAX were both off nearly 1 percent.

"The markets are now beginning to focus on a global economic slowdown with higher interest rates and higher inflation," said Peter Cardillo, chief market analyst at S.W. Bach & Co. "Investors are beginning to wonder if we're headed for stagflation."

Cardillo said an economic slowdown would cause a drop in demand for commodities like oil and metals, and so money is pouring out of those inflated markets and into safe haven investments like government bonds in both the U.S. and Europe.

Oil prices fell below $68 a barrel, down 86 cents at $67.67 in early electronic trade.

U.S. light crude for June delivery lost 86 cents to $67.67 a barrel in early electronic trade, while the July contract for Brent crude fell 74 cents to $67.94.

Gold continued to unwind from a one-month run up, dropping 3.5 percent in London, while copper fell 2.3 percent.

Accordingly, Treasury prices rose, dropping the yield on the benchmark 10-year note to 5.02 percent from 5.06 late Friday.

Cardillo said that as yields on the 10 year fall closer to 5 percent the bond yield curve becomes flatter, meaning shorter-dates notes pay an interest rate that's nearly as high as riskier, longer dates ones. If the curve becomes inverted experts start to fear recession, as an inverted curve has proceeded many past recessions.

Art Hogan, chief market analyst at Jefferies & Co, also said concerns over inflation and whether the Fed will raise interest rates again are weighing on U.S. markets.

Hogan said the Dow is already down 4.5 percent from near all-time highs reached two weeks ago, and he doesn't have a whole lot of hope that the slide can be stemmed.

"We're pretty darn close to anybody's definition of a correction already," he said. "We could have some softness this week."

Although U.S. stocks made modest gains Friday, the Dow fell precipitously for the week, losing nearly 300 points. The 2.1 percent drop was its worst week in four months, according to Reuters.

Prior to Friday, the Nasdaq was on an eight-session losing streak, its longest rut since September 1994.

In corporate news, The New York Stock Exchange launched a $10.2 billion bid for Euronext, setting up a possible battle with Deutsche Boerse.

Wal-Mart (Research) said it will exit the South Korean market, selling its stores to a domestic retailer for $882 million.

On the positive side, big box hardware retailer Lowe's (Research) posted a profit of $1.06 per share, beating analysts estimates of 94 cents, according to Reuters.

No major economic reports are due.

The dollar gained on the yen and was little changed against the euro.

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